Ecommerce Accounting Glossary

A

Aged Receivable

Aged Receivables are unpaid customer invoices grouped by how long they've been outstanding, often in buckets like 0–30, 31–60, 61–90, and 90+ days. For example, if a $1,000 invoice is 45 days late, it appears in the 31–60 days category. This report helps track overdue payments, manage cash flow, and identify collection priorities.

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Aged Payable

Aged Payables are outstanding bills a business owes to suppliers, grouped by how long they've been unpaid (e.g., 0–30, 31–60, 61–90, 90+ days). For example, if a $500 supplier invoice is 75 days overdue, it appears in the 61–90 days category. This report helps manage cash flow and monitor overdue obligations.

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AI Analytics

AI Analytics is the use of artificial intelligence and machine learning to analyze vast amounts of data, uncover insights, predict future trends, and automate decision-making. It goes beyond traditional analytics by identifying complex patterns that humans might miss.

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AOV: Average Order Value

Average Order Value (AOV) measures the average amount customers spend per order. It's a key ecommerce metric for tracking revenue performance. Example: If total revenue is ₹50,000 from 2,000 orders, then AOV = ₹50,000 ÷ 2,000 = ₹25. Formula: AOV = Total Revenue ÷ Number of Orders

A

AP (Accounts Payable)

Accounts Payable (AP) is the money a business owes to suppliers or vendors for goods and services received on credit. It represents short-term liabilities on the balance sheet. For example, if a company buys $2,000 worth of inventory on credit, that amount is recorded as accounts payable until it's paid.

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AR (Accounts Receivable)

Accounts Receivable (AR) is the money a business is owed by customers for goods or services delivered but not yet paid for. For example, if a company sells $10,000 worth of products on credit, it records this as AR until the customer pays. It is considered a current asset on the balance sheet.

A

ASP (Average Selling Price)

Average Selling Price (ASP) is the mean price at which a product or service is sold across all transactions during a specific period. Example: A company sells 100 smartphones generating $50,000 in revenue. ASP = $50,000 ÷ 100 = $500 per smartphone. Formula: ASP = Total Revenue ÷ Total Units Sold

A

Accrual Accounting

Accrual Accounting records revenue and expenses when they are earned or incurred, not when cash is received or paid. For example, if a service is provided in December but paid for in January, the revenue is recorded in December. This gives a more accurate picture of financial performance.

A

Amortization

Amortization is the process of gradually reducing the cost of an intangible asset or paying off a loan in scheduled installments over time. Example: A business that spends $12,000 on a software license for 3 years records $4,000 annually as amortization expense instead of the full cost upfront.

A

Annual Recurring Revenue (ARR)

Annual Recurring Revenue (ARR) is the predictable revenue a company expects to receive annually from subscription-based or recurring contracts. Example: A software company has 500 customers paying $100/month each. ARR = ($100 × 500) × 12 = $600,000 annually. Formula: ARR = Monthly Recurring Revenue × 12

A

Audit

Audit is an independent examination of a company's financial statements to ensure accuracy and compliance with accounting standards. Conducted by a qualified auditor, it verifies that financial reports fairly represent the company's financial position, helping detect errors or fraud.

A

Audit Trail

Chronological record of all transactions and activities, providing complete documentation from initiation to completion. It enables verification, tracking, and accountability by showing who did what, when, and why. Example: A purchase order audit trail includes requisition form, approval signatures, purchase order, vendor invoice, receiving report, and payment voucher.

B

Balance Sheet

Balance Sheet is a financial statement that shows a company's financial position at a specific point in time. It summarizes assets, liabilities, and owners' equity. Formula: Assets = Liabilities + Equity

B

Bank Feeds

Bank Feeds are an automated feature in accounting software that securely connects your bank or credit card accounts to the system, importing transactions directly. Example: If your business uses QuickBooks with bank feeds, yesterday's customer payment of $500 will automatically appear in QuickBooks, ready for matching with your invoices.

B

Bank Reconciliation

Bank Reconciliation is the process of matching and comparing a company's accounting records with its bank statement to ensure both balances agree. It helps identify errors, missing entries, or fraudulent activities.

B

Bad Debt

Bad Debt is money owed to a business by a customer that is unlikely to be paid, due to bankruptcy, financial trouble, or refusal. Example: If a company sells goods worth $5,000 on credit and the customer goes bankrupt, that $5,000 is treated as bad debt expense, reducing profits.

B

Bookkeeping

Bookkeeping is the systematic process of recording and organizing all financial transactions of a business — sales, purchases, payments, and receipts — forming the foundation for accounting.

B

B2B

Business-to-Business (B2B) refers to transactions, products, or services exchanged between two businesses, rather than between a business and individual consumers. B2B usually involves larger order values and longer sales cycles. Example: A wholesaler selling raw materials to a manufacturer.

B

B2C

Business-to-Consumer (B2C) refers to transactions where a business sells products or services directly to individual consumers for personal use. Example: An online store selling clothes to shoppers.

B

BNPL (Buy Now, Pay Later)

Buy Now Pay Later (BNPL) is a short-term financing option that lets consumers buy products immediately but pay later in installments, often interest-free. Example: A customer can purchase a $200 item, pay $50 upfront, and pay the rest in equal installments over weeks or months.

B

BOGO or Buy X Get Y

Buy One, Get One (BOGO) or Buy X, Get Y is a promotional sales strategy where customers receive an extra product after purchasing a specific quantity. Example: Buy 2 shirts, get 1 free.

B

Break-Even Analysis

Break-Even Analysis is a financial calculation that shows the point at which total revenue equals total costs. Example: If fixed costs are $10,000, selling price is $50 per unit, and variable costs are $30 per unit, the break-even point is 500 units. Formula: Break-even Point (units) = Fixed Costs ÷ (Selling Price per Unit − Variable Cost per Unit)

B

Budget

Budget is a detailed financial plan that outlines expected income and expenses over a specific period. It typically covers fixed costs, variable costs, one-time expenses, and cash flow forecasts.

B

Bundles

Bundles combine multiple products or services into a single package sold at a discounted price compared to buying items separately. Example: A 'Small Business Suite' that bundles accounting software, payroll, and inventory tracking for $150 monthly instead of $220 separately.

B

Buyer's Persona

Buyer's Persona is a detailed, fictional representation of an ideal customer based on market research and real data, including demographics, behaviors, goals, and motivations.

C

CAC (Customer Acquisition Cost)

CAC measures the cost to acquire one new customer. Example: If $50,000 is spent on marketing and 500 customers are gained, CAC = $50,000 ÷ 500 = $100 per customer. Formula: CAC = Total Sales & Marketing Costs ÷ New Customers Acquired

C

Capital

Capital refers to the money, assets, or financial resources a company uses to operate, pay expenses, and grow — cash, equipment, property, or investments actively used to generate value.

C

Capital Expenditure (CapEx)

Capital Expenditure (CapEx) is money spent by a business to buy, upgrade, or maintain long-term assets like buildings, equipment, or land. Example: Buying a new machine for $10,000 used for 10 years is CapEx, depreciated annually.

C

Capital Gain

Capital Gain is the profit earned when you sell an asset for more than its purchase price. Example: If you bought shares for $5,000 and later sold them for $7,500, your capital gain is $2,500. Formula: Capital Gain = Selling Price − Purchase Price

C

Cash Accounting

Cash Accounting is an accounting method where income and expenses are recorded only when cash is actually received or paid. Example: If you issue an invoice in June but get paid in July, revenue is recorded in July.

C

Cash Basis

Cash Basis is an accounting method that records revenues and expenses only when cash is actually received or paid. Example: If you bill a client in March but receive payment in April, income is recognized in April.

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Cash Equivalents

Cash Equivalents are short-term, highly liquid investments that can be quickly converted into cash with minimal risk. Common examples include Treasury bills, money market funds, and short-term government bonds.

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Cash Flow

Cash Flow is the movement of money into and out of a business during a specific period. Positive cash flow means more money is coming in than going out; negative means the opposite.

C

Cash Flow Statement

A Cash Flow Statement is a financial report that shows how cash moves in and out of a business, divided into Operating, Investing, and Financing Activities.

C

Campaign Tracking

Campaign Tracking is monitoring the performance of marketing campaigns by tagging URLs to capture data on traffic sources, user actions, and conversions.

C

Cart-Conversion Rate

Cart-Conversion Rate measures how many shoppers who add items to their cart actually complete the purchase. Example: If 1,000 carts are created and 300 result in purchases, the rate = 30%. Formula: (Completed purchases ÷ Carts created) × 100

C

Chargeback

Chargeback is a payment reversal initiated by the customer through their bank or credit card provider, often due to fraud, unauthorized use, or dissatisfaction. Example: If a shopper claims they never received a $100 order and the bank sides with them, the seller must refund it.

C

Chart of Accounts

Chart of Accounts (COA) is a structured list of all financial accounts used by a business to record transactions, categorized into assets, liabilities, equity, revenue, and expenses.

C

CMS (Content Management System)

A Content Management System lets users create, manage, and publish digital content without needing coding skills. Example: WordPress lets businesses build and manage blogs, ecommerce stores, or corporate sites.

C

CLV (Customer Lifetime Value)

Customer Lifetime Value is the total revenue a business expects to generate from a single customer throughout their relationship. Example: If a customer spends $50 per order, buys 4 times a year, and stays for 5 years, CLV = $1,000. Formula: CLV = Average Purchase Value × Purchase Frequency × Customer Lifespan

C

Compliance

Compliance refers to adhering to laws, regulations, standards, and internal policies that govern a business. Non-compliance can result in penalties, fines, or legal action.

C

Conversion Rate

Conversion Rate is the percentage of users who take a desired action out of total visitors. Example: If 1,000 people visit a store and 50 make a purchase, the conversion rate is 5%. Formula: (Conversions ÷ Total visitors) × 100

C

Contribution Margin

Contribution Margin is the amount of sales revenue remaining after deducting variable costs. Example: If a product sells for $100 and variable costs are $60, the contribution margin = $40 (40%).

C

Conversion Funnel

A Conversion Funnel is the step-by-step process customers go through from discovering a brand to completing a purchase — wide at awareness, narrowing to conversion.

C

Cost of Goods Sold (COGS)

COGS is the total direct cost of producing or purchasing the products a business sells during a period. Example: If a retailer starts with $50,000 in inventory, buys $20,000 more, and ends with $40,000, COGS = $30,000. Formula: COGS = Beginning Inventory + Purchases − Ending Inventory

C

COGS Mapping

COGS Mapping is the process of identifying, categorizing, and tracking all direct costs that contribute to COGS, mapping how expenses flow through production.

C

Cost-Per-Click

CPC is an advertising metric where advertisers pay a fee each time a user clicks their ad. Example: If a campaign spends $500 and gets 1,000 clicks, CPC = $0.50 per click.

C

CRM (Customer Relationship Management)

CRM is a set of practices, strategies, and technologies companies use to manage and analyze customer interactions and data throughout the customer lifecycle.

C

Cross-sell

Cross-Sell is a sales strategy offering complementary products based on a customer's current or previous purchases. Example: Suggesting a mouse or laptop bag when someone buys a laptop.

C

Current Assets

Current Assets are business assets that can be converted into cash, sold, or consumed within one year — cash, accounts receivable, inventory, prepaid expenses, and marketable securities.

C

Current Liabilities

Current Liabilities are a company's short-term financial obligations due within one year — accounts payable, accrued expenses, short-term loans, wages payable, and taxes owed.

C

Customer Journey

Customer Journey is the complete path a customer takes from first discovering a brand to becoming a loyal buyer, including all touchpoints.

C

Customer Retention Rate

CRR is the percentage of existing customers a business retains over a period. Example: If a company starts with 1,000 customers, gains 200 new ones, and ends with 1,100 total, retention rate = 90%. Formula: ((Customers at End − New Customers) ÷ Customers at Start) × 100

C

CTR (Click-Through Rate)

CTR measures the percentage of users who click a specific link, ad, or email out of total viewers. Example: If an ad is shown 10,000 times and gets 500 clicks, CTR = 5%. Formula: (Clicks ÷ Impressions) × 100

D

Data Backup

Data Backup is the process of creating copies of important files, databases, or systems to protect against data loss.

D

Data Security

Data Security is the practice of protecting digital information from unauthorized access, theft, corruption, or loss — encryption, access controls, data masking, backups, and policies.

D

Data Sync

Data Synchronization keeps data consistent and up-to-date across multiple devices, platforms, or systems. Example: When stock is updated in an inventory system, sync reflects the same quantity instantly on Amazon, Shopify, and the accounting software.

D

Demand Forecasting

Demand Forecasting estimates future demand for a product based on historical sales data, market trends, and other factors, helping companies plan production and manage inventory.

D

Deferred Expenses

Deferred Expenses (prepaid expenses) are costs a business pays in advance for future goods or services, recorded as assets and gradually expensed over time. Example: A $12,000 one-year insurance policy is expensed $1,000 each month.

D

Deferred Revenue

Deferred Revenue (unearned revenue) is income received in advance for goods or services not yet delivered, recorded as a liability until provided. Example: $24,000 collected for a 12-month service recognizes $2,000 as revenue each month.

D

Depreciation

Depreciation is the systematic reduction of the recorded cost of a tangible fixed asset over its useful life. Example: A $60,000 delivery truck with a 5-year useful life expenses $12,000 annually via straight-line depreciation.

D

Deposit Reconciliation

Deposit Reconciliation verifies that deposits recorded in accounting records match deposits shown on bank statements. Example: A $5,000 recorded deposit vs. $4,950 on the bank statement due to fees — reconciliation identifies the $50 difference.

D

Digital Wallets

Digital Wallets are electronic applications that securely store payment information and allow users to make online or contactless payments quickly. Example: Apple Pay or PayPal.

D

Dimensional Weight

Dimensional Weight (DIM Weight) is a shipping pricing method based on a package's size rather than actual weight. Formula: (Length × Width × Height) ÷ Divisor Example: A 20×15×10 in. box = 3,000 cubic inches; with a DIM factor of 139, DIM Weight ≈ 22 lbs.

D

Discount Code

A discount code is an alphanumeric code customers apply at checkout for a price reduction or special offer. Example: The code SAVE15 gives customers 15% off their total purchase.

D

DTC

DTC (Direct-to-Consumer) is a business model where brands sell products directly to customers, bypassing wholesalers, distributors, or retailers.

D

Dynamic Pricing

Dynamic Pricing adjusts product prices in real time based on demand, competition, seasonality, or customer behavior. Example: A retailer raises the price of a popular gadget when demand spikes but lowers it later to attract price-sensitive buyers.

E

Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)

EBITDA measures a company's core profitability by excluding interest, taxes, depreciation, and amortization. Example: $500,000 net income + $50,000 interest + $100,000 taxes + $80,000 depreciation + $20,000 amortization = $750,000 EBITDA. Formula: EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization

E

Earnings Before Interest and Tax (EBIT)

EBIT (Operating Profit) measures a company's profitability from core operations, excluding financing costs and taxes. Example: $1,000,000 revenue − $700,000 operating expenses = $300,000 EBIT. Formula: EBIT = Revenue − Operating Expenses (excluding interest and tax)

E

Earnings Before Tax (EBT)

EBT shows a company's profitability after all expenses except income taxes. Example: $1,000,000 revenue − $600,000 operating expenses − $50,000 interest = $350,000 EBT.

E

Earnings Per Share (EPS)

EPS measures how much profit a company generated per outstanding share of stock. Example: $2,000,000 net income − $200,000 preferred dividends ÷ 900,000 shares = $2.00 per share EPS.

E

EOFY (End of Financial Year)

EOFY is the conclusion of a company's 12-month accounting period, when businesses close their books and prepare annual financial statements. Timing varies by country (e.g., June 30 in Australia, Dec 31 in the US).

E

ERP (Enterprise Resource Planning)

ERP is software that integrates and manages core business processes — finance, inventory, supply chain, sales, HR, and manufacturing — into a single centralized system.

E

Expense Tracking

Expense Tracking is the process of monitoring and recording business or personal expenditures to ensure spending stays within budget and aligns with financial goals.

F

Fixed Assets

Fixed Assets are long-term tangible resources a business owns and uses to generate income, not intended for sale within 12 months — buildings, machinery, vehicles. Formula: Net Fixed Assets = Gross Fixed Assets − Accumulated Depreciation

F

Fixed Costs

Fixed Costs are business expenses that do not change with production or sales volume — rent, salaries, insurance, and lease payments.

F

Financial Forecasting

Financial Forecasting estimates a company's future financial performance using historical data, current trends, and assumptions about future conditions.

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Financial Reporting

Financial Reporting is the process of preparing and presenting financial statements that communicate a company's financial performance to stakeholders.

F

Fulfillment

Fulfillment is the end-to-end process of receiving, processing, and delivering customer orders — storing inventory, picking and packing, shipping, and handling returns.

G

General Ledger (GL)

General Ledger is a comprehensive record of a company's financial transactions organized by accounts, using a double-entry system where every debit has a corresponding credit.

G

GL Mapping

GL Mapping assigns transactions from various systems to the correct general ledger accounts for accurate financial reporting. Example: Shopify sales revenue mapped to 'Sales Revenue,' payment fees mapped to 'Bank Fees Expense.'

G

Ghost Commerce

Ghost Commerce is an ecommerce model where sellers don't create or stock their own products, instead promoting existing products via affiliate marketing, dropshipping, or white-label arrangements.

G

Granular (Order-Level) Posting

Granular Posting records every individual sales order as a separate entry in the general ledger, instead of grouping sales into a summarized batch. Example: Order #101: $200 revenue, $20 shipping, $5 fee — recorded individually.

G

Gross Margin

Gross Margin shows how much profit a company makes from selling its products, after subtracting direct costs. Example: If revenue is $100,000 and COGS is $60,000, gross margin = 40%. Formula: (Revenue − COGS) ÷ Revenue × 100

G

GMV (Gross Merchandise Value)

GMV is the total sales dollar value of all goods sold through a platform over a period, before deducting fees or returns. Example: 1,000 products sold at $50 each = $50,000 GMV.

H

Hosted Ecommerce Platform

A Hosted Ecommerce Platform is a cloud-based service where the ecommerce software and website are hosted and managed by a third-party provider. Example: Shopify, BigCommerce.

H

Hybrid Selling

Hybrid Selling combines multiple channels — online and offline — to reach customers and close deals, enhancing personalized customer experiences.

H

Hybrid Posting/Flexible Posting

Hybrid Posting lets businesses choose between order-level and summary-level posting depending on their needs, combining detail with efficiency.

I

IAM

IAM (Identity and Access Management) is a security framework controlling who has access to what resources within an organization's systems and applications.

I

Impression

Impression counts how many times an ad, post, or content is displayed on a screen, regardless of engagement. Example: If an ad appears on 1,000 feeds, that's 1,000 impressions.

I

Impairment

Impairment is the reduction in the value of a company's asset below its carrying value on the balance sheet. Example: Machinery recorded at $100,000 with fair value now $70,000 records a $30,000 impairment loss.

I

Incoterm

Incoterms are standardized trade terms defining buyer and seller responsibilities for shipping, insurance, and risk transfer in international transactions, published by the ICC.

I

Inventory

Inventory refers to the goods, raw materials, and products a business holds for sale or use in production, including raw materials, work-in-progress, and finished goods.

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Inventory Management

Inventory Management oversees ordering, storing, and tracking inventory to optimize costs while ensuring product availability.

I

Inventory Turnover Ratio

The Inventory Turnover Ratio measures how many times a company sells and replaces its inventory during a period. Example: COGS = $500,000, average inventory = $100,000, turnover ratio = 5. Formula: COGS ÷ Average Inventory

I

Inventory Sync

Inventory Sync is the automatic updating of stock levels across multiple sales channels, warehouses, and systems in real time. Example: Selling 5 units on Amazon instantly updates the count to 95 on Shopify, eBay, and the accounting system.

I

Invoice

Invoice is a commercial document issued by a seller to a buyer, requesting payment for goods or services provided — a formal record of a sale.

J

JIT (Just-in-Time Inventory)

JIT inventory orders and receives materials only when needed in production, minimizing holding costs and waste.

J

Journal Entry

A Journal Entry is the formal record of a financial transaction, following the double-entry system where every entry has equal debits and credits.

J

Journal Audit

A Journal Audit examines a company's journal entries to ensure they are accurate, properly documented, and compliant with accounting standards.

K

KPI (Key Performance Indicator)

KPI is a measurable value demonstrating how effectively a company is achieving key business objectives. Example: Conversion rate is a KPI measuring the percentage of visitors who make a purchase.

L

Liquidity Ratio

Liquidity Ratio measures a company's ability to meet short-term debts using liquid assets. Types include Current Ratio, Quick Ratio, and Cash Ratio.

L

LTV (Lifetime Revenue)

LTV is the predicted total revenue a business can expect from a customer throughout their relationship. Example: $50 per order × 4 times yearly × 3 years = $600 LTV. Formula: LTV = Average Order Value × Purchase Frequency × Customer Lifespan

M

Marketplace Fees

Marketplace Fees are charges platforms like Amazon or eBay levy on sellers, including listing fees, referral fees, and advertising costs. Example: A 15% referral fee on a $100 sale.

M

Margin of Safety

Margin of Safety is the difference between actual sales and the break-even point. Example: If sales are $10,000 and break-even is $8,000, margin of safety is $2,000.

M

Minimum Advertised Price (MAP)

MAP is the lowest price a retailer can publicly display for a product, as dictated by the brand. Example: Apple sets iPhone MAP at $999; retailers can sell for less but not advertise below it.

M

Monthly Recurring Revenue (MRR)

MRR is the predictable revenue a business expects every month. Example: 10 customers paying $50/month = $500 MRR. Formula: MRR = Subscribers × Average Revenue Per User

M

Moving Average

Moving Average smooths short-term fluctuations in data to reveal long-term trends. Example: 5-day MA of $10, $12, $8, $15, $10 = $11.

M

Multichannel

Multichannel is the practice of selling products across multiple platforms — marketplaces, ecommerce websites, social media, and physical stores.

M

Multichannel Revenue Attribution

Multichannel Revenue Attribution identifies how different sales and marketing channels contribute to revenue, ensuring credit is fairly distributed across touchpoints.

N

Net Promoter Score (NPS)

NPS measures how likely customers are to recommend a business. Example: 50% promoters, 10% detractors, NPS = 40. Formula: % Promoters − % Detractors

N

Net Profit

Net Profit is the amount a business earns after deducting all expenses from total revenue. Example: $100,000 revenue − $70,000 expenses = $30,000 net profit.

N

NetSuite

NetSuite is a cloud-based ERP platform that helps businesses manage accounting, finance, inventory, CRM, and ecommerce in one system.

O

O2O (Online-to-Offline)

O2O integrates online and offline channels to drive customers between digital and physical touchpoints. Example: A shopper browses online, reserves, then purchases in-store.

O

Omnichannel

Omnichannel seamlessly integrates all online and offline channels for a unified shopping journey. Example: Adding to cart on Shopify, checking in-store, and completing purchase on Amazon — all synced.

O

OMS (Order Management System)

An OMS tracks sales, orders, inventory, and fulfillment, automating the entire order process from purchase to delivery.

O

One Page Checkout

One Page Checkout combines all necessary fields — shipping, billing, payment — onto a single page to simplify and speed up purchase.

O

Online Payment Processing

Online Payment Processing securely authorizes, captures, and settles customer payments made via the internet.

O

Operating Cash Flow

OCF is the cash generated from a company's core business operations, excluding investments and financing. Example: $200,000 net income + $30,000 depreciation − $20,000 working capital change = $210,000 OCF.

O

Operating Income

Operating Income shows profit from core operations after deducting operating expenses, before interest and taxes. Example: Revenue $500K − COGS $200K − Opex $150K = $150K Operating Income.

O

Operating Profit

Operating Profit is earnings from core business after operating expenses, depreciation, and amortization, before interest and taxes. Example: Sales $500K − COGS $350K − Opex $30K − Depreciation $20K = $100K.

O

Order Success Page

An Order Success Page ('Thank You' page) is the final screen a customer sees after completing a purchase, confirming success and providing order details.

O

Overhead

Overhead refers to ongoing business expenses not directly related to creating a product — rent, utilities, salaries, and insurance.

O

Overselling

Overselling is selling more products than actually available in inventory, causing cancellations and dissatisfaction. Example: A seller has 10 units but sells 15 across Amazon and Shopify due to unsynced stock.

O

OVP (Online Value Proposition)

OVP is the unique combination of products, services, and benefits a business offers online that differentiates it from competitors.

P

Payment Gateway

A Payment Gateway allows businesses to accept and process customer payments, acting as a bridge between merchant and bank while encrypting sensitive data. Example: Stripe or PayPal.

P

Payouts

Payout is the net transfer of funds from a sales channel or payment processor to a merchant's bank account after deductions. Formula: Payout = Gross Sales − Fees − Refunds

P

Payroll

Payroll is the total compensation a business pays employees for a set period. Formula: Net Pay = Gross Pay − (Taxes + Deductions + Benefits)

P

PCI/DSS Compliance

PCI/DSS refers to the Payment Card Industry Data Security Standard, security requirements for businesses that accept, process, store, or transmit credit card information.

P

PIM System

A PIM (Product Information Management) system centralizes and manages all product information in one place, ensuring data consistency across channels. Examples: Akeneo, Salsify.

P

Point of Sale (POS)

A POS is the location and system where a retail transaction is completed, processing payments and recording sales. Examples: Square, Lightspeed.

P

PPC (Pay-Per-Click)

PPC is a digital advertising model where a business pays a fee each time an ad is clicked. Formula: CPC = Total Ad Cost ÷ Clicks; Total PPC Cost = CPC × Clicks

P

Print on Demand (POD)

POD is an ecommerce model where custom-printed products are only produced after an order is placed, eliminating the need for inventory. Examples: Printful, Redbubble.

P

Product Bundles

Product Bundles are multiple individual products sold together as one combined package, often at a discounted price. Example: A beach kit with sunscreen, towels, and flip flops.

P

Profit & Loss Statement (P&L)

A P&L statement summarizes a company's revenues, expenses, and profits/losses over a specific period. Formula: Net Profit (or Loss) = Total Revenue − Total Expenses

P

Profit Margin

Profit Margin measures how much profit a business makes as a percentage of revenue. Example: A product sells for $100 with $70 costs, margin is 30%. Formula: (Net Profit ÷ Revenue) × 100

P

Purchase Order (PO)

A Purchase Order is a formal document a buyer issues to a supplier, specifying products, quantities, and agreed prices before purchase.

Q

QuickBooks

QuickBooks is Intuit's accounting software that helps businesses manage bookkeeping, invoicing, payroll, and financial reporting.

Q

QuickBooks Online

QuickBooks Online is cloud-based accounting software by Intuit that lets businesses manage invoices, expenses, payroll, and taxes from anywhere with real-time updates.

Q

QuickBooks Desktop

QuickBooks Desktop is locally installed accounting software offering advanced features like inventory management, payroll, and reporting, installed on a single office computer.

R

Remote Access Accounting Services (RaaS)

RaaS provides businesses with secure, cloud-based access to accounting data, enabling remote processing and real-time collaboration with accountants from any location.

R

Reconciliation

Reconciliation is the process of comparing and verifying two sets of financial records, such as bank statements and accounting books, to ensure accuracy.

R

Referral Marketing

Referral Marketing encourages existing customers to recommend a product or service to others, leveraging word-of-mouth to acquire new customers.

R

Refunds & Returns

Refunds & Returns describe the process where a customer sends a purchased item back and receives their money back — a key part of retail operations.

R

Real-Time Reporting

Real-Time Reporting is collecting and displaying data as it is generated, allowing businesses to monitor activities with minimal delay for immediate decision-making.

R

Retained Earnings

Retained Earnings are the cumulative net profits a company keeps after paying dividends, reinvested to fund growth, pay down debt, or purchase assets.

R

Return on Ad Spend (ROAS)

ROAS measures revenue generated for every dollar spent on advertising. Example: $2,000 in sales from a $500 ad campaign = 4x ROAS. Formula: Revenue from Ads ÷ Advertising Cost

R

Return on Investment (ROI)

ROI measures the profitability of an investment by comparing net profit to investment cost. Example: Investing $1,000 and earning $1,200 returns a 20% ROI. Formula: (Net Profit ÷ Investment Cost) × 100

R

Return on Assets (ROA)

ROA shows the percentage of profit a company earns relative to total assets. Example: $200,000 net income, $1,000,000 assets = 20% ROA. Formula: (Net Income ÷ Total Assets) × 100

R

Return on Equity (ROE)

ROE measures profitability by revealing how much profit a company generates with shareholder investments. Example: $1,000,000 net income, $5,000,000 equity = 20% ROE. Formula: (Net Income ÷ Average Shareholders' Equity) × 100

S

Software as a Service (SaaS)

SaaS is a cloud-based software delivery model where users access applications via the internet on a subscription basis, with the provider managing maintenance and updates.

S

Sales Channel

Sales Channel is the medium through which a business sells products or services, online or offline. Example: An ecommerce brand selling via Shopify and retail stores.

S

Sales Forecasting

Sales Forecasting predicts future sales revenue by analyzing past sales data, market trends, and customer behavior. Example: 10,000 units × $50 average price = $500,000 projected revenue.

S

Sales Tax

Sales Tax is a government-imposed percentage fee added to the sale of goods or services, collected by sellers and remitted to tax authorities.

S

Sales Tax Nexus

Sales Tax Nexus is the connection a business has in a state that legally requires it to collect and remit sales tax there. Example: Having a warehouse or exceeding $100,000 in sales in Texas creates a nexus there.

S

SEO (Search Engine Optimization)

SEO is the process of improving a website's visibility and ranking on search engines by optimizing content, keywords, and site structure to attract organic traffic.

S

Settlement Report Posting

Settlement Report Posting records the detailed breakdown of a payout received from a sales channel, posting gross sales, fees, refunds, and other transactions into accounting software.

S

SKU (Stock Keeping Unit)

An SKU is a unique identifier assigned to each product for inventory tracking and sales analysis. Example: A red, size M t-shirt may have SKU: TS-RED-M.

S

Social Commerce

Social Commerce is the practice of selling products directly through social media platforms, allowing the entire buying journey without leaving the app.

S

Store Credit

Store Credit is a non-cash refund issued to a customer, usable for future purchases from the same store, often used for returns without a receipt.

S

Stockout

Stockout occurs when a business runs out of a specific item in its inventory, leading to lost sales. Formula: Stockout Rate = Out-of-Stock Items ÷ Total Items × 100

S

Subscription Box

Subscription Box is a recurring delivery of curated, niche-oriented products sent on a regular schedule, typically themed around interests like food, beauty, or hobbies.

S

Subscription Bundle

Subscription Bundle groups several products or services together as a single subscription package, often at a discounted rate.

S

Summary Posting

Summary Posting groups multiple individual transactions and records them as a single entry, often done daily or per-payout to keep records manageable.

T

TAM (Total Addressable Market)

TAM is the total revenue opportunity available for a product if it achieved 100% market share. Example: Selling to all 1,000 coffee shops in a city at $5,000 annually each = $5 million TAM.

T

Tax Returns

Tax Returns are official documents filed with tax authorities reporting income, expenses, and deductions to calculate tax obligations or refunds.

T

Trial Balance

Trial Balance is the bookkeeping report that lists all ledger accounts with debit and credit balances to ensure they match.

T

Tax Compliance

Tax Compliance means adhering to tax laws by accurately reporting income, filing returns on time, and paying taxes owed.

U

Upsell

Upsell is a sales strategy encouraging customers to buy a higher-priced, upgraded version of a product or add-ons, increasing order value.

U

User Permissions

User Permissions define the access rights and actions for individual users within a software system, ensuring data security and proper workflow delegation.

V

Value-Added Tax (VAT)

VAT is a consumption tax placed on a product whenever value is added at each stage of the supply chain, common in the EU, ultimately paid by the final consumer.

V

Variable Costs

Variable Costs are expenses that change directly with production volume, such as materials, shipping, or transaction fees. Formula: Total Variable Costs = Cost per Unit × Number of Units

W

Warehouse Management System (WMS)

A WMS is software that helps businesses manage and control daily warehouse operations, from goods entering to leaving, optimizing tracking, picking, and shipping.

W

Workflow Automation

Workflow Automation uses software to automate manual business tasks, minimizing human intervention and freeing employees for higher-value work.

W

Working Capital

Working Capital is the difference between a company's current assets and current liabilities. Example: $230,000 current assets − $100,000 current liabilities = $130,000 working capital.

W

Write-off

Write-Off is an accounting action that reduces the value of an asset to zero, removing it from the books, such as for an uncollectible debt or obsolete inventory.

X

Xero

Xero is cloud-based accounting software designed for growing businesses, offering real-time financial insights, automated bank reconciliation, invoicing, and expense tracking.

Y

Yield Management

Yield Management is a dynamic pricing strategy that adjusts prices of a perishable resource to maximize revenue based on forecasted demand and seasonality. Formula: Yield = Actual Revenue ÷ Potential Revenue × 100

Z

ZMOT (Zero Moment of Truth)

ZMOT is a marketing concept introduced by Google — the moment a consumer researches a product online before purchase, gathering reviews and information that shape their buying decision.

Ecommerce Accounting Glossary

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